The FED forecasts a drop in US wage growth
A report prepared by the FED determined that there will be stagnation in the increase in wages in the second half of 2023
In a recent report, the US Federal Reserve (FED) projected a slowdown in wage growth for the second half of the year, attributing it to rising labor costs. These costs, in large part, are the result of the Fed’s decisions to increase interest rates in order to control inflation.
The forecast, presented in the central bank’s “beige book”, anticipates a decline in wage growth in the short term. The Fed has noted that labor cost pressures have been significant in most districts, and in many cases have exceeded expectations in the first half of the year. This analysis is based on data provided by the different regional Federal Reserves, collected over the last two months.
In this context, a slowdown in job creation has been observed throughout the country during the same period, with a contraction in the hiring rate. According to the Bureau of Labor Statistics (BLS), job creation in August reached 187,000 positions, a figure below the average for the last twelve months, which was 271,000.
Furthermore, the unemployment rate increased by three tenths in August, reaching 3.8 %. Although still low, this increase reflects the eleven consecutive interest rate increases implemented by the FED since March 2022.
Despite the slowdown in hiring, the Fed highlights that imbalances in the labor market persist, with a limited supply of skilled workers and a reduced number of available applicants, as reported in the beige book.
In its analysis, the Federal Reserve also assessed price growth and noted an overall slowdown in most districts, especially in the manufacturing and consumer goods sectors.
The report reveals that while consumer spending on tourism beat expectations, retail spending elsewhere continued to slow, especially for non-essentials. This suggests that consumers may be depleting their savings and relying more on loans to maintain their spending levels.
The Federal Reserve has scheduled its next meeting on September 19 and 20, in which a decision will be made regarding the continuation or pause in the rise in interest rates.
K. Tovar
Source: Bancaynegocios
(Referential image source: Alexander Grey, Unsplash)
Visit our news channel on Google News and follow us to get accurate, interesting information and stay up to date with everything. You can also see our daily content on Twitter and Instagram
